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More than 1/4 of all rent as a result of 2% annual gift to landlords

Saturday, August 30, 2003, 1:05 p.m.

The North Toronto Tenants' Network with support from the Ontario And Toronto Tenants web site condemn the 2.9% rent increase guideline amount for 2004, quietly announced yesterday by the Ontario Ministry of Municipal Affairs and Housing. They demand these automatic guideline increases be abolished.

The North Toronto Tenants' Network, says, "the annual rent increase guideline amount must be abolished."

This guideline amount announced annually by the Ontario government, is the amount landlords are permitted to automatically increase rents, whether or not they provide the service they are supposed to under their leases. Any "above guideline" rent increases applied for by landlords are on top of this yearly automatic amount.

The guideline is based upon a 3 year average of the Consumer Price Index, plus an extra 2%.

Two percent increases above inflation compounded over the past 17 years since that formula was established, translate to an extra 40.0% increase in rents, over and above inflation. That means over 1/4 of tenants' rent costs are due to this 2% (compounded annually since 1986,) gift to landlords paid by tenants. ie. 100 - 100/(1 + .40) = 28.57%

Many tenants already had large rent increases under the Ontario government's Tenant "Protection" Act, mostly due to the temporary price spike in natural gas prices 32 months ago. But, the guideline amount these rent increases are added to, is based upon the Consumer Price Index that already includes the price of heating, natural gas, plus electricity, and many other costs.

"This is triple dipping. The landlords get a rent increase for any increased costs through the inflation portion of the rent increase guideline, plus they get a 2% bonus on everything, plus they can and do apply for and get an "above guideline" rent increases on the very same costs included in the inflation portion, all legislated and approved of by the government," says Robert Levitt on his Ontario And Toronto Tenants web site.

"To add insult to injury, tenants can not apply to have these rent increases for late 2000's/early 2001 gas spike taken off, after those costs went back down in later in 2001 under the Tenant "Protection" Act. Now that gas prices have again risen since the Autumn of 2002, landlords can apply for another above guideline rent increases based upon the price rise over the previous year even though prices are still lower than in the late-2000/early-2001 prices for which they already received a previous and permant rent increase above the guideline. Landlords can get rent increases for any increases in costs, but tenants can not get decreases for any decreases in those very same costs. "We pay the increase forever for a few month's spike in prices, and tenants can expect further above guideline rent increases in 2004 on top any previous increases for another gas price spike," says Lynn Carleton of the North Toronto Tenants Network.

A 20 year study of London, Ontario apartment prices, released by the Ontario Association of the Appraisal Institute of Canada, in 1993, said that the annual rent increases, under our system of rent controls (with this guaranteed guideline,) "helped and not hindered the market," for investments in rental buildings. That report also said, "there appeared to be comfort to the landlord that rent increases had been sanctioned by government . . .".

Landlords should not get automatic rent increases for nothing, and if they do have any special costs, they should not be added to tenants' rents on top of an automatic annual guideline. Also any rent increases must come off for items if the costs of those items come back down or have been paid off by the increase. Real rent controls do not give landlords an annual guaranteed minimum rent increase. The annual guideline rent increase, is only adding to the amount of economic evictions of tenants, and must be abolished.

For further information contact:

North Toronto Tenants' Network
email: northtorontotenants@hotmail.com

Robert Levitt
Webmaster, Ontario And Toronto Tenants (web site)

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